GEORGIA PROPERTY AND CASUALTY
INSURANCE EXAMS FINAL
COMPREHENSIVE ASSESSMENT TEST
PAPER QUESTIONS AND SOLUTIONS
⩥ Exposure.
Answer: susceptibility to risk
⩥ Implied Warranty.
Answer: a legal term meaning that a product is suitable for its intended
purpose and that it fits an ordinary buyer's expectations
⩥ Insurance policy.
Answer: a contract between a policyowner (and/or insured) and an
insurance company which agrees to pay the insured or the beneficiary
for loss caused by specific events
⩥ Insurer (principal).
Answer: the company who issues an insurance policy
⩥ Obsolescence.
,Answer: depreciation in the value of a property due to becoming
outdated
⩥ Premium.
Answer: the money paid to the insurance company for the insurance
policy
⩥ Tort.
Answer: a wrongful act or the violation of someone's rights that leads to
legal liability
⩥ Insurance.
Answer: a transfer of risk of loss from an individual or a business entity
to an insurance company, which, in turn, spreads the costs of unexpected
losses to many individuals.
⩥ Law of Large Numbers.
Answer: states that the larger the number of people with a similar
exposure to loss, the more predictable actual losses will be. Forms the
basis for statistical prediction of loss upon which insurance rates are
calculated.
⩥ Insurable Interest.
,Answer: Any financial interest in life or property such that, if the life or
property were lost or harmed, the insured would suffer financially.
⩥ The 3 Elements of Insurable Risk.
Answer: 1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
⩥ When must insurable interest exist in property and casualty
insurance?.
Answer: at the time of the loss
⩥ Risk.
Answer: the uncertainty or chance of a loss occurring.
⩥ What are the two types of Risk?.
Answer: 1. Pure Risk
2. Speculative Risk
⩥ Pure Risk.
Answer: refers to situations that can only result in a loss or no change.
There is no opportunity for financial gain. Pure risk is the only type of
risk that insurance companies are willing to accept.
, ⩥ Speculative Risk.
Answer: involves the opportunity for either loss or gain. An example of
speculative risk is gambling. These types of risks are not insurable.
⩥ Peril.
Answer: A specific cause of loss. These insured against in standard
property policies include fire, wind, hail, and explosions.
⩥ Hazards.
Answer: conditions or situations that increase the probability of an
insured loss occurring. Conditions such as slippery floors or congested
traffic - which may increase the chance of a loss occuring
⩥ The 3 Types of Hazards.
Answer: 1. Physical
2. Moral
3. Morale
⩥ Physical Hazard.
Answer: hazards arising from the material, structural, or operational
features of the risk, apart from the persons owning or managing it
INSURANCE EXAMS FINAL
COMPREHENSIVE ASSESSMENT TEST
PAPER QUESTIONS AND SOLUTIONS
⩥ Exposure.
Answer: susceptibility to risk
⩥ Implied Warranty.
Answer: a legal term meaning that a product is suitable for its intended
purpose and that it fits an ordinary buyer's expectations
⩥ Insurance policy.
Answer: a contract between a policyowner (and/or insured) and an
insurance company which agrees to pay the insured or the beneficiary
for loss caused by specific events
⩥ Insurer (principal).
Answer: the company who issues an insurance policy
⩥ Obsolescence.
,Answer: depreciation in the value of a property due to becoming
outdated
⩥ Premium.
Answer: the money paid to the insurance company for the insurance
policy
⩥ Tort.
Answer: a wrongful act or the violation of someone's rights that leads to
legal liability
⩥ Insurance.
Answer: a transfer of risk of loss from an individual or a business entity
to an insurance company, which, in turn, spreads the costs of unexpected
losses to many individuals.
⩥ Law of Large Numbers.
Answer: states that the larger the number of people with a similar
exposure to loss, the more predictable actual losses will be. Forms the
basis for statistical prediction of loss upon which insurance rates are
calculated.
⩥ Insurable Interest.
,Answer: Any financial interest in life or property such that, if the life or
property were lost or harmed, the insured would suffer financially.
⩥ The 3 Elements of Insurable Risk.
Answer: 1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
⩥ When must insurable interest exist in property and casualty
insurance?.
Answer: at the time of the loss
⩥ Risk.
Answer: the uncertainty or chance of a loss occurring.
⩥ What are the two types of Risk?.
Answer: 1. Pure Risk
2. Speculative Risk
⩥ Pure Risk.
Answer: refers to situations that can only result in a loss or no change.
There is no opportunity for financial gain. Pure risk is the only type of
risk that insurance companies are willing to accept.
, ⩥ Speculative Risk.
Answer: involves the opportunity for either loss or gain. An example of
speculative risk is gambling. These types of risks are not insurable.
⩥ Peril.
Answer: A specific cause of loss. These insured against in standard
property policies include fire, wind, hail, and explosions.
⩥ Hazards.
Answer: conditions or situations that increase the probability of an
insured loss occurring. Conditions such as slippery floors or congested
traffic - which may increase the chance of a loss occuring
⩥ The 3 Types of Hazards.
Answer: 1. Physical
2. Moral
3. Morale
⩥ Physical Hazard.
Answer: hazards arising from the material, structural, or operational
features of the risk, apart from the persons owning or managing it
